The devil in the detail
I want to share a case study with you that illustrates how important mastery of the detail can be in negotiations.
The recent commissioning of the Manildra Group’s new cogeneration plant at the Shoalhaven Starches site at Bomaderry marked a significant milestone in the development of this world-scale wheat starch and gluten manufacturing site. Infralegal provided legal advice to the Manildra Group throughout the project's development – beginning in 2001.
The importance and attraction of the project was never in doubt. It was also a testament to the Manildra Group's commitment to sustainability. Two gas turbines with heat recovery steam generators, each capable of producing 27 megawatts of electricity and 105 T/hr of steam, ensure a continuous 24-hour electricity supply to the Shoalhaven Starches site. The significant reduction in coal-fired electricity usage is equivalent to removing up to 300,000 tonnes of carbon dioxide from the atmosphere annually – comparable to taking 150,000 cars off the road.
To deliver the $250m project, the negotiating team had to secure a mutually beneficial Engineering, Procurement and Erection Contract with GE Verona. The legal team recognised that success depended on a detailed understanding of the rollout hurdles and risks specific to the project. This strategic appreciation revealed many risks that would be retained by the Manildra Group including:
the timely construction of the civil foundations for the new plant
the construction of a new gas pipeline, in time to supply the natural gas needed to commission and operate the cogeneration plant;
obtaining the approvals required from AEMO and Endeavour Energy to alter the site electricity grid connection and connect the new plant to the grid;
constructing a new building around the cogeneration plant, without disrupting GE Verona’s plant erection activities;
the timely delivery of various ‘balance of plant’ works to connect and integrate the new cogeneration plant into existing steam distribution and other facilities.
The Manildra Group immediately saw the strategic value of the team’s legal advice and asked Infralegal to chair fortnightly meetings with the Manildra Group’s project team to implement a risk management plan and adjust it as new risks and contractual issues emerged. This led to a detailed plan for managing these and other risks.
Like all complex construction projects, this project generated many challenges for the Manildra Group team. However, the ultimate value of the legal team went well beyond legal obligations and entitlements. Comprehensive understanding of the desired outcomes made it possible to resolve issues swiftly with the Manildra Group’s contractors on favourable commercial terms. The new plant generated its first steam and electricity in the 2023 financial year, and the commissioning process was completed in Q1 2024. All contractual issues were resolved amicably.
And it certainly helped to have a progressive client who saw the value of integrating its legal adviser in the strategic team.
The project illustrates the value clients can obtain by investing in strategic, commercially astute legal advice throughout the delivery phase of complex projects.
